Offshore Trusts Report: Liechtenstein

In 2008, Liechtenstein's parliament approved reform
of the jurisdiction's foundations law which, the government claims,
adhere to international standards while continuing to protect privacy.

The new foundation law was due to enter into force on April 1,
2009. The reform is part of the government's ongoing modernization
of Liechtenstein company structures which has included revisions
to the law governing associations and cooperative societies, and
the introduction of the European Company and the European Cooperative
Society. As announced by the government, a revision of trust law
will follow.

"Liechtenstein’s total revision of foundation law
is based on the contemporary demands and needs of the financial
centre's’s clients," the government announced in
mid-2008.

"The balanced overall concept of the reform...meets international
standards without deviating from the Liechtenstein legal tradition,
which has always considered the protection of privacy to be
a valuable good," the government said.

"The requirements of market participants were taken into
account, as well as the need to create a legal foundation that
can be measured in accordance with scientific criteria and international
standards, as the government stipulated in its guideline at
the beginning of the reform process," the government stated.

The new foundation law is a self-contained body of law with
a new systematic structure differentiating private-use from
charitable foundations and strengthening the responsibility
of the founder. The protection of the foundation assets is subject
to new rules, as are the supervision of foundations and foundation
governance. The non-transferability of the founders’ rights
as a further new key feature entails greater legal certainty
and clarity.

The “deposited” foundation, which need not be registered
in the Public Registry and has thus been an object of criticism,
has been retained. The government justifies the retention of
this type of foundation by noting that it serves to protect
the confidentiality of the founder if he wants to engage in
long-term asset planning in the interest of his family. The
exemption from the registration requirement only applies to
private-use foundations, however, not to commercially operating
foundations, which as a rule are limited to the mere management
of assets.

The government also asserts that confidentiality in the foundation
system is not peculiar to Liechtenstein. In Austria, where foundation
law is closely based on Liechtenstein law, foundations must
be entered in the corporate registry, but since a professional
trustee acts on behalf of the founder when establishing the
foundation and the name of the foundation may be freely chosen,
the beneficial founder can remain in the background.

The government also points out that in Switzerland, with which
the old Liechtenstein foundation law had close links, family
foundations are exempt from entry in the commercial registry.
Meanwhile, in Germany, only a limited publicity of foundations
applies, which as a rule does not extend to the person of the
founder.

The Principality argues that a switch to a general registration
requirement for all foundations, including private-use foundations
without a commercial purpose, would significantly diminish the
attractiveness of the Liechtenstein foundation in an international
comparison.

The government's so-called 'Futuro' project, which sets out
the future vision of Liechtenstein's economy, calls foundations
the “heart of the financial centre." The government
believes that the new system of foundation supervision will
serve as a model internationally. The 'Futuro' project also
harbours plans to make Liechtenstein into a location for trusts,
by harmonizing them with Anglo-Saxon trust structures.

Liechtenstein News

Liechtenstein, Malta Sign DTAFriday 4/10/2013Liechtenstein's Foreign Minister Aurelia Frick and her Maltese counterpart
George Vella have recently signed in New York a bilateral double taxation agreement
between the two countries in respect of taxes on income and on wealth.

Liechtenstein Congratulated On Successful Tax PolicyThursday 19/9/2013Standard and Poor's has maintained Liechtenstein's triple A rating,
alluding to a stable outlook and highlighting the fact that the Principality's
fiscal and financial policies have very much contributed to Liechtenstein's
reputation and strength as a safe, reliable, and attractive economic location.

Austria Eyes US FATCA DealFriday 10/5/2013Austrian Chancellor Werner Faymann has announced plans to enter into talks with
the US and with the Organization for Economic Cooperation and Development,
aimed at combating tax fraud and tax evasion.

Austria Willing To Negotiate With EU On Banking SecrecyWednesday 1/5/2013Austrian Chancellor Werner Faymann and Deputy Chancellor Michael Spindelegger
have recently confirmed Austria's willingness "to participate constructively"
in negotiations between the European Union and third states on an automatic
exchange of banking information.

LGT Headquarters Middle East Business In DubaiTuesday 19/2/2013LGT Group, the international private banking and asset management group, owned
by the royal family of Liechtenstein, has chosen Dubai as the headquarters of its new subsidiary, LGT (Middle East) Limited, following regulatory approvals to operate in the Dubai International Financial Center.

Austria To Agree Swiss-Style Tax Deal With LiechtensteinTuesday 15/1/2013During an upcoming working visit to Vienna, Liechtenstein’s Prime Minister
Klaus Tschütscher is due to hold talks with key ministers from the Austrian
chancellery and from the finance ministry, with the discussions focussing on the
"imminent conclusion" of a bilateral tax agreement between the two countries.

Liechtenstein, UK DTA In ForceWednesday 2/1/2013Following the exchange of relevant notifications, the agreement pertaining
to the avoidance of double taxation and tax evasion in the area of taxes on
income and on wealth between Great Britain and Northern Ireland and the Principality
of Liechtenstein has now entered into force.

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